Dr. Panos M.Pavlidis Strategies for Achieving Advantage POSITIONS SOURCES PERFORMANCE
Strategic Choices How can we gain new advantages?
Do we have an advantage? Why?
Core value proposition?
Sources of advantage?
How vulnerable is our position?
Threat of imitation?
Threat of disruption?
STRATEGY = Integrated actions designed to achieve superior delivery of customer value
Achieving Superior Performance Positions of Advantage
Most complete solution
Sources of Advantage
Key Success Factors Objectives for Growth and Profit Investing to Sustain Advantages
How Vanguard Gains a Competitive Advantage Positional Advantages Tight Cost Control Efficient Investment Approach Broad Array of Funds Direct Distribution Consistent Communi- cation Low rate of trading Bonuses tied to cost saving Frugal policies Index funds Discourage trading Wary of risky categories Education about risk Rely on word-of-mouth Clear buy-and-hold policy No retail outlets On-line access Negligible advertising No commissions to brokers Sources
Lowest costs (expense ratio of 0.3% vs. 1.2% for competition)
Superior performance (Index Fund beat 86% of all stock funds)
Diversity of offerings
Customer's Views of Value Leaders Operational Excellence Performance Leadership Customer Responsiveness "A great deal" "Best price" "Trouble free basic service" "Always at cutting edge" "High price but worth it" "Constantly renewing and creative" "Really understand my business" "Exactly what I need" “ Close business partner"
Comparing Value Strategies Thrust of strategy Organization Core processes Economic driver
Lowest delivered cost
Top down – employees more directed than enabled
“ Have it your way” mindset
Decisions based on fine-grained information
Integrated view of customer (CRM)
Assessing Advantage: What does our target market want?
Who are our real customers?
How well do we know the decision-making unit?
What values are they seeking = which attributes are perceived as important?
What segment differences?
Assessing Advantage: What is our current position?
Location on the value map?
Value = perceived benefits – perceived total
(life cycle) costs
How do we compare to the competition on each attribute?
Evolving Strategic Choices Introduction Growth Maturity Segment C Segment B Segment A
t 1 t 2 t 1 t 2 t 1 t 2
How First Direct Gained Advantage over High Street Banks Ability to retain and attract best people Business model Low employee turnover + Positive attitude High productivity Culture Service delivery capability Customer relating capability Location Selection Training Grouping Flexible hours Lower operating costs CRM systems Data- bases Customer understanding and selection Superior profitability Lower marketing costs High customer satisfaction and retention No branches 24 x 7